CFPB Releases Updated Rural and Underserved Counties List

The Consumer Financial Protection Bureau this week released a list of U.S. counties it will define as rural and underserved for 2014, qualifying lenders that operate predominantly in those areas for exemptions from some of its mortgage rules.

The list, posted on the CFPB’s website along with a blog entry, includes some counties whose status has changed due to updated information from the 2010 Census. That means some small lenders will lose exemption status, the CFPB said.

However, the bureau proposed some modifications to its mortgage rules on June 24 that will provide a transition period for affected lenders.

For example, under the proposed change, small lenders that qualified for a rural and underserved exemption from a requirement to create escrow accounts for five years for higher-priced mortgage loans – a rule that took effect June 1 – would be allowed to use the CFPB’s 2012 counties list when making loans in 2014, even if their counties were removed from the new 2014 list released on Tuesday.

Comments on that proposal change are due to the CFPB by July 22.

The CFPB also reminded lenders in the blog post that all small lenders, regardless of whether they operate in rural or underserved counties, will be allowed to continue originating balloon loans and count them as qualified mortgages until Jan. 10, 2016. That exemption, which has already been finalized by the CFPB, intends to allow small lenders to transition their mortgage lending programs away from balloon loans, which are prohibited under qualified mortgage rules. A permanent QM balloon loan exemption for lenders that operate in predominately rural or underserved counties will not change.

The CFPB also proposed on June 24 to extend that QM exemption to small lenders making high-cost balloon mortgages, regardless of their rural or underserved status. Comments on that proposal are also due to the CFPB by July 22.

“We will work to issue a final rule as quickly as possible this summer so that creditors’ status will be clear in advance of the January effective dates of the affected rules,” said CFPB regulatory attorney Paul Mondor in the July 2 blog post.